NSE CEO Geoffrey Odundo, Nairobi Business Ventures Chairman Haresh Soni, NSE Chairman Kiprono Kittony and ABC Group Managing Director Shamaz Savani at NBV’s Bell ringing ceremony. [Wilberforce Okwiri,Standard] When the Nairobi Securities Exchange (NSE) launched the Growth and Enterprise Segment (GEMS) in 2013, there was optimism across the board that this would be the major instrument to unlock a years’ long drought of listings at East Africa’s largest bourse.
With reduced eligibility criteria including the Sh10 million minimum paid-up capital compared to Sh50 million for the main market segments, tax breaks and no demand on profitability records, the GEMS offered smaller firms a clear path to list on the capital markets.
“We would like to see as many Kenyan businesses as possible, and there are many, share their businesses with their fellow Kenyans,” said Mugo Kibati, then director-general of Vision 2030. READ MORE
“Come and list. This is why we have introduces GEMS so that we can give you an alternative, less onerous, less stringent avenue to share your wealth, business and ideas with your fellow Kenyans,” he said.
Kibati, who now heads Telkom Kenya, was then speaking at the official listing of Home Afrika, the first firm to list at the GEMS in 2013.
The event was billed as a milestone in Kenya’s capital markets history.
Home Afrika listed 405 million shares at the introductory price of Sh12 per share, valuing the real estate company at more than Sh4.8 billion.
Today, Home Afrika’s shares have plummeted.
They traded at Sh0.44 as at the close of trading Friday, giving the company a Sh1.6 billion valuation.
This means that in the past seven years, the company has lost more than Sh3.2 billion of its book value.
The company’s trend at the bourse has become a cautious bellwether for the GEMS – raising questions as to why both investors and eligible companies are shying away from participating in this market segment.A report commissioned by the Capital Markets Authority (CMA) NSE and FSD Kenya found that despite the reduced entry criteria in the GEMS, companies looking to list still encounter various roadblocks that could explain the apathy.According to the report, small companies that had significantly thought about listing at the GEMS suggested that need to raise the company’s profile and obtain growth capital as the most important drivers of their decision.“Raising the profile of the business was actually the most commonly reported r eason for accessing GEMS and the NSE in […]